Nestlé decentralises decision making
Company sets up local teams to aid sales push, quicken marketing and feedback
Nestlé India, the food and beverage (F&B) major, is decentralising its decision making.
The aim is better consumer insight, more focused offers to different sets of consumers and to revamp market penetration. It has set up ‘virtual’ teams for each geographically and culturally different cluster and these could also come up with local variants of established brands, apart from more targeted communication and distribution.
Around 15 virtual teams have been established, in charge of the same number of clusters. They are to monitor operations in the regions, decide on promotion and distribution, and send insights to headquarters. Each comprising 10-20 personnel, the teams began operating last year —they have members from regional sales, category marketing and supply chain verticals.
The idea, first conceived in late 2016, was “better access, communication, (field) activation, insights and distribution” in each region, says Suresh Narayanan, chairman and managing director, Nestlé India.
In future, they might also look at launching local variants of some products, depending on the insights gathered.
“Categories like masala, sauces, coffee, confectionary and prepared food could be considered,” said the chairman.
The initiative, feels Narayanan, should help the management take decisions faster, while being flexible and focused. And, aid the ongoing drive to increase market penetration. After the Maggi noodle fiasco in 2015, Nestlé’s offline retail reach plunged to 3.5 million outlets, from five mn before the Maggi ban in June that year.
Over time, the number has gone up to 4.2 mn outlets but this is well behind other large consumer goods giants Hindustan Unilever (7.2 mn) and ITC (six mn). Nestlé India’s management has set an aim to double annual revenue by 2020 from the present ~10,000 crore. For that, more penetration is needed.
The Geneva-headquartered entity’s recent focus has been on offering value added, premium and semi-premium products that do not also require compromising on profit margin. Its eyes are set on the top 100 cities and adjoining regions as its key market in India.
With the new initiative, Nestlé is now trying to reach out to the next set of such cities and towns. While, the top 100 will remain the major contributor to sales, Narayanan says the next 300 to 400 towns are crucial for future growth.
“Consumer profiles in India are changing fast. If we don’t prepare to reach more towns, we will miss out future growth opportunities. This is to prepare for that,” he explained.